Is Climate Policy Endangering Efforts to Address Energy Poverty?

A few weeks ago, I had the privilege of spending a day with people from around the world who are deeply involved in trying to deliver electricity to the nearly two billion people who lack it. I learned a lot, but I was struck by one pattern: a large fraction of the people and countries working to expand energy access seem to be shaping their initiatives so that they can tap into the hundred billion dollars a year of climate-related funding that developed countries have promised they’ll try to mobilize by 2020. In practice, this means that many appear to be tilting their energy access efforts strongly toward renewable energy and away from fossil fuels, and toward dependence on a yet-to-be-created Green Climate Fund. These are dangerous trends.

Why? For starters, the $100 billion per year remains very much aspirational. It would be unwise for anyone to bet their energy access and poverty reduction agendas on it materializing. Moreover, even if it did come through, I’d expect a large fraction of it to be delivered through carbon makets, i.e. offsets. Those flows will go primarily to advanced developing countries that have the capacity to establish large and robust carbon markets at home; alas these are not, in general, the countries that tend to lack access to electricity. The bottom line is that energy-poor countries should not be counting on climate funds to save them.

This concern might be moderated if a big shift in energy access efforts to focus to renewables made sense in its own right. But it doesn’t. Don’t get me wrong: renewables are often the most cost effective way to deliver energy access, particularly to remote populations. Often, though, they’re not. Sometimes diesel generators or very small oil burning power plants (connected to mini-grids) will be the best bet; sometimes connection to the broader grid, which might ultimately be fed by big coal or gas fired power plants, will make the most sense. And with funds for delivering energy access scarce, this sort of cost effectiveness calculation matters a lot. Moreover, as countless people have shown, the choice of fuels for bringing electricity to those who don’t have it will make almost no difference to climate change; there is no significant climate-based reason to tilt energy access efforts strongly toward renewable.

The fact that nearly a quarter of the world’s people don’t even have a light bulb is tragic. But it is even worse that we appear to be steering some of those who might help them onto potentially inefficient and counterproductive paths. I am as quick as anyone to object to people (like Bjorn Lomborg) who argue that confronting climate change robustly will come at the expense of dealing with poverty. If we don’t guard carefully against unintended side effects of our climate policies, though, that may be precisely what we do.